The Boy Scouts of America have reached a $ 850 million agreement with attorneys representing some 60,000 victims of child sexual abuse which may prove to be an essential moment in the organization’s bankruptcy case.
The regulation would mark one of the largest sums in U.S. history involving cases of sexual abuse.
Lawyers for the BSA filed court papers late Thursday describing a restructuring support agreement with attorneys representing victims of abuse. The agreement also includes attorneys representing local Boy Scout councils and attorneys appointed to represent victims who could file future claims.
The BSA attorney wrote: “After months of intensive negotiations, the debts have been resolved with each official constituency and major creditor in these Chapter 11 cases.
Boy Scouts of America, based in Irving, Texas, sought bankruptcy protection in February 2020, moving to stop hundreds of lawsuits and create a compensation fund for men who were abused as teens decades ago by scoutmasters or other leaders.
But BSA attorneys were unable to find attorneys for the victims, BSA’s local council and sponsored organizations, and insurers agreed on a global resolution that would compensate victims of abuse while allowing the 111-year-old organization to continue operating.
The agreement signals the BSA’s recognition that the gap between attorneys representing victims of abuse and those representing BSA insurers is too large to resolve. They may very well be left to resolve their differences in future court battles, a prospect that the BSA has sought to avoid.
In a court hearing before Thursday, lawyers for certain insurance companies accused BSA of allowing lawyers for victims of abuse to rewrite the BSA’s restructuring plan to set favorable terms for clients.
The insurers wrote: “With only the fox guarding the chicken coop, the result does not agree with what the BSA itself has declared necessary for a confirmable and acceptable plan under the bankruptcy code.”
Sisters Sierra and Dayna Rohmann of Maryland set their sights on becoming Eagle Scouts two years ago, when the Boy Scouts of America first opened up to girls. Now they are among the first group of girls to realize that top honor.
Advocates for insurance companies appear to be particularly concerned that the BSA’s liability for abuse claims should be judged under the trust distribution proposal procedure in an effort to decide insurance coverage issues.
Meanwhile, in connection with the restructuring support agreement, lawyers for the Boy Scouts are asking U.S. Bankruptcy Judge Laurie Selber Silverstein to state that they have no obligation to seek court approval in a previously announced settlement with Hartford, one of the BSA carrier.
Hartford agreed to pay $ 650 million in the victims ’trust in exchange for being released from any other obligations under the settlement from 1971. The agreement allowed Hartford to pay a smaller amount if the BSA or trust in settlement arose. in an agreement with another major BSA insurer, Century Insurance Group, and Century’s settlement amount is less than twice Hartford’s, or $ 1.3 billion.
Hartford’s policy has been widely criticized by lawyers for abuse victims, who estimate exposing the insurer’s liability to billions. They made it clear that the victims would not support any plan including the Hartford settlement.
Boy Scouts said that between $ 2.4 billion and $ 7.1 billion, including insurance rights, could be available for abuse victims. Attorneys for the claims committee, which is charged with acting as a trustee in the bankruptcy case for all abuse victims, have estimated the value of some 82,500 sexual abuse claims at approximately $ 103 billion.
“All plaintiff representatives, representing the vast majority of those with direct abuse claims, have indicated that any plan containing the Hartford Settlement should be categorically rejected,” the BSA attorney wrote in court filing Thursday. “Without their support, they must be forced to pursue a plan that incorporates the Hartford regulation appears useless.”
Matthew Sturdevant, a spokesman for the Hartford, said the company’s agreement with the Boy Scouts “is an important building block to move this bankruptcy case toward a conclusion.”
Sturdevant said: “We are disappointed that the Boy Scouts of America have chosen to adhere to the organization’s principles of keeping their promises when seeking to cast a well-thought-out negotiation and mutually agreed on appropriate contracts to value Hartford’s obligations,” Sturdevant tells you.
In a joint statement, victims’ representatives and future claimants said the restructuring support agreement will allow the Boy Scouts to emerge from bankruptcy “while providing significant compensation to the victims, and holding Boy Scouts insurance companies are in the terms of insurance policies for scouts and their affiliates bought over several decades. “
In a revised plan submitted just two weeks ago, the BSA offered to issue a $ 80 million warrant note to a trust fund for abuse victims. He also proposed using restricted assets to help cover post-bankruptcy operating expenses, which could make up to $ 50 million in unrestricted cash available to abuse survivors. With these changes, the BSA’s proposed contribution to the trust fund would increase from approximately $ 120 million under a previous plan to as much as approximately $ 250 million.
Under a new plan scheduled for Friday’s filing, the 250-odd BSA local council would contribute $ 600 million in funds to victims of abuse, doubling a $ 300 million bid earlier this year.
In return for the contributions to the trust fund and the transfer of insurance rights, the BSA and local assemblies should be released from liability. Sponsored organizations such as churches and civic groups could also be freed from further responsibilities in exchange for contributing to the fund and transferring insurance rights.
A hearing in the case is scheduled for July 20.